Mayilvahanan Funds (P) Ltd. v. P. Sheena, P. A. Mohanan, and R. M. Sundaran

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN** ## **WEDNESDAY, THE 28TH DAY OF SEPTEMBER 2016/6TH ASWINA, 1938** ## **OP(C).No. 1951 of 2011 (O)** **-----------------------------------------** ## **O.S.NO. 57/2009 OF SUBORDINATE COURT, OTTAPALAM** **------------------** ## **PETITIONER(S) :** **-------------------------** **MAYILVAHANAM FUNDS (P) LTD., REPRESENTED BY MANAGING DIRECTOR, C.A.THAMBI, AGED 53 YEARS, S/O. C.A.ABRAHAM, CHEMMARIKKAD VEEDU, SHORANUR, OTTAPALAM TALUK.** **BY SMT.SUMATHY DANDAPANI (SENIOR ADVOCATE) ADV. SRI.MILLU DANDAPANI** **RESPONDENT(S) :** - **-----------------------------** **1. P.SHEENA, AGED 27 YEARS, W/O.P .A.MOHANAN, KIZHAKKETHIL VEEDU, VARAVOOR VILLAGE, P.O.PILAKKAD, THALAPPILLY TALUK, THRISSUR DISTRICT-680 585.** **2. P.A.MOHANAN, AGED 37 YEARS, S/O. THANKUTTY, KIZHAKKETHIL VEEDU, -DO- -DO-** **3. R.M.SUNDARAN, AGED 39 YEARS, S/O. KRISHNAN (MANU), PROPRIETOR, MOHAN JEWELLERY, EDAPPAL, RESIDING AT RARAMKANDATH VEEDU, KALADI, EDAPPAL, PONNANI TALUK-679 582.** **R2 BY ADVS. SRI.SANTHEEP ANKARATH SRI.SUMODH MADHAVAN NAIR** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 28-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Msd. **OP(C).No. 1951 of 2011 (O)** ## **-----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXHIBIT P1: TRUE COPY OF THE PLAINT IN O.S.NO. 57/2009 ON THE FILE OF THE SUB COURT, OTTAPPALAM.** **EXHIBIT P2: TRUE COPY OF THE WRITTEN STATEMENT FILED BY THE RESPONDENTS IN O.S.NO. 57/2009 DATED 19.05.2009.** **EXHIBIT P3: TRUE COPY OF THE ORDER PASSED BY THE LEARNED SUB JUDGE IN O.S.NO. 57/2009 DATED 17.06.2011.** ## **RESPONDENT(S)' EXHIBITS :** ## **NIL** **//TRUE COPY//** **P.A.TO JUDGE.** Msd. K.RAMAKRISHNAN, J. ======================== O.P.(C) No.1951 of 2011 ========================== Dated this the 28[th] day of September, 2016 ## JUDGMENT The plaintiff in O.S No.57 of 2009 on the file of the Sub Court, Ottappalam has filed this petition challenging the disposal of the suit on a preliminary issue on the question of limitation under Article 227 of the Constitution of India. 2. It is alleged in the petition that the petitioners filed Ext.P1 suit as O.S No.57 of 2009 before the Sub Court, Ottappalam for recovery of amount due on a chitty transaction. According to the petitioners, the first respondent joined a chitty on 03.09.2003 and he auctioned the chitty on 10.03.2003 and an amount of Rs.5,25,000/- was disbursed to him and respondents 2 and 3 are guarantors and all the respondents have executed an agreement dated 13.12.2003 agreeing to pay the future instalments and also agreed as per the terms of the agreement that the guarantee O.P.(C) No.1951/2011 2 agreement will be in force for a period of three years from the date of last payment of the instalments. The first respondent paid up to ten instalments thereafter committed default in payment of the amount. Notice has been issued on 05.11.2005 demanding the amount. But they did not pay the amount. So the suit was filed for realisation of the entire amount. The respondent entered appearance and admitted the execution of the document and also receipt of the amount. But, according to them, their signatures were obtained in certain typed documents and they were not aware of the contents of the document and they also contented that the suit is not maintainable as the chitty was not registered in accordance with law and the amounts claimed is not proper. They also contended that the suit is barred by limitation. They also contended that they have paid 30 instalments and that was not properly accounted. So according to them, the suit is barred by limitation and they prayed for O.P.(C) No.1951/2011 3 dismissal of the suit. The court below had framed an issued that whether the suit is barred by limitation and it was taken as a preliminary issue and passed Ext.P3 impugned order stating that except the lastinstalment other instalments are barred and directed the petitioner to produce the statement. This order is being challenged by the petitioner by filing this petition. 3. Heard Smt.Sumathi Dandapani, senior counsel appearing for the petitioner and Sri.Santheep Ankarath, counsel appearing for the respondents. 4. Counsel for the petitioner submitted that this is not a case where the court ought to have disposed of the suit under Order XIV Rule 2(2) of Code of Civil Procedure and after the amendment Act of 1976 court is expected to answer all issues framed unless it falls under Order XIV Rule 2(2) where the cases are pending or disposed of either on the basis of question of law alone regarding the jurisdiction issue and barred to the suit O.P.(C) No.1951/2011 4 created by any law for the time being in force. In all other cases the court will have to decide the question on the basis of evidence. Question of limitation cannot be treated as a question of law alone as it is only a question of law and fact and in such circumstances that issue cannot be decided as a preliminary issue. The learned counsel has relied on the decisions reported in Panchanan Dhara and Others v Monmatha Nath Maity (Dead) Through LRs and Another (2006(5) SCC 340), Lufthansa German Airlines v Vij Sales Corporation (1998(8) SCC 623), Gunwanthbhai Mulchand Shah v Anton Elis Farel and Others (2006(3) SCC 634), Gomes v Manual Gomes and Others (2012(1) KLJ 87), Taj Kerala Hotels and Resorts Ltd. v Easytec India Pvt. Ltd. (2013(4) KLT 621), Anil Kumar v Boby Joseph, (2014(1) KLT 114) in support of her contentions. 5. On the other hand, counsel for the respondent submitted that the limitation for filing the suit on the basis of O.P.(C) No.1951/2011 5 chitty transaction will arise depending on the date of default and not on the termination of the chitty and court below had correctly applied the law and rightly held that portion of the amount claimed is barred by limitation and that was rightly decided as a preliminary issue. He had relied on the decision reported in John C.J and Others v Oriental Kuries Ltd. and Others (2009(1) KHC 850), Krishnan Madhavan v Narayanan Jayadevan (1974 KHC 92), Sukumaran v Sankaran (1977 KHC 290) and Chirag Enterprises v Star Traders and another (ILR 2012(4) Kerala 266) in support of his case. 6. It is an admitted fact that the plaintiff filed the suit for realization of amount on the basis of chitty transaction claiming the entire balance amount due after deducting the instalments paid. They have relied on Ext.A1 agreement in order to said limitation by which it has been stated that all the respondents have agreed that the guarantee agreement will O.P.(C) No.1951/2011 6 survive for a period of three moths from the termination of the chitty transaction. It is on that basis the suit has been filed. Respondents who are the defendants in the court below filed written statement admitting the chitty transaction but they have contended that they have not executed any document and their signatures were obtained in blank papers and also on typed documents. They were not aware of the contents of the documents. They also contended that they have paid the entire 30 instalments to the agents of the plaintiff and they have not properly accounted the same. So there is no amount due from them and they prayed for dismissal of the suit. It appears from the contentions that court below had framed several issues. One of such issues was whether the suit was barred by limitation and decided the question as a preliminary issue and came to the conclusion that Article 36 of Limitation Act is not applicable and Article 37 is applicable and if Article 37 is applicable then the O.P.(C) No.1951/2011 7 period of limitation start from the date of default in payment of the amount and not on the termination of the chitty agreement and decided the part of the case and came to the conclusion that except the 30[th] instalment other instalments are barred by limitation and directed the case to be posted for trial on that aspect. This is being challenged by the petitioner. 7. Order XIV Rule 2 reads as follows: “In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or O.P.(C) No.1951/2011 8 other cause of a like nature, is unable to entertain it.” 8. In the intention of legislature it appears by the amendment after 1976 was that notwithstanding that the case may be disposed of on a preliminary issue, the court shall, subject to the provisions of sub rule (2) pronounce judgment on all issues and further sub rule (2) of Rule (2) says where the issue of both law and fact arise on the same suit and the court is of the opinion that the case of any part thereof may be disposed on an issue of law only. It may try that issue first if that issue relates to (a) the jurisdiction of court or (b) a bar to the suit created by any law for the time being in force and for that purpose if we thinks fit postpone the settlement of other issues until after that issue has been determined and may deem with the suit in accordance with the decision on that issue. In this case the question is as to whether the suit is barred by limitation or not. The decisions O.P.(C) No.1951/2011 9 relied on by the counsel for the respondent namely John C.J and Others v Oriental Kuries Ltd. and Others (2009(1) KHC 850), Krishnan Madhavan v Narayanan Jayadevan (1974 KHC 92), Sukumaran v Sankaran (1977 KHC 290) and Chirag Enterprises v Star Traders and another (ILR 2012(4) Kerala 266) are all arising out of the final disposal of the suit after taking evidence and where the question of limitation has been decided as part of the disposal of the case, then, that was decided in those decisions this court has came to the conclusion proposing the law of limitation as to how it will have to be applied in the case of chitty transaction. So it cannot be taken as a decision rendered by the court on the question as to whether limitation can be tried as a preliminary issue under Order XIV Rule 2(2) of the Code of Civil Procedure. But this question has to be considered by the apex court in the decision reported in Panchanan Dhara and Others v Monmatha Nath Maity (Dead) Through LRs and Another (2006(5) O.P.(C) No.1951/2011 10 SCC 340) and held that the question of limitation cannot be treated as a clear question of law alone amenable to be decided as a preliminary issue under Order XIV Rule 2(2) of Code of Civil Procedure. This view has been approved by the apex court in another decision reported in Lufthansa German Airlines v Vij Sales Corporation (1998(8) SCC 623) and Gunwanthbhai Mulchand Shah v Anton Elis Farel and Others (2006(3) SCC 634) and followed by this Court in the decision reported in Gomes v Manual Gomes and Others (2012(1) KLJ 87), Taj Kerala Hotels and Resorts Ltd. v Easytec India Pvt. Ltd. (2013(4) KLT 621) and Anil Kumar v Boby Joseph (2014(1) KLT 114) and held that the question of limitation being a mixed question of fact and law, that cannot be decided by the court as a preliminary issue under Order XIV Rule 2(2) of Code of Civil Procedure and only after deciding the issue on the basis of the evidence the court can report finding as to whether the suit is barred by limitation or any portion of the O.P.(C) No.1951/2011 11 claim made is barred by limitation or not. So, under such circumstances, the procedure followed by the court below in taking the question of limitation as a preliminary issue and passing the impugned order is unsustainable in law and the same is liable to be set aside. Further in this case petitioner is relying on Ext.A1 agreement for saving limitation and that was specifically pleaded in the plaint as well. Further the execution of that document has been disputed by the defendants. So, under such circumstances, without taking evidence on the question of execution of the document on which the petitioner is relying on for the purpose of saving limitation court below ought not have decided the question of limitation as a preliminary issue as has been done in this case. Further, the defendant is also pleading discharge that also has to be considered on the basis of evidence. So, when the question of limitation as to how the parties have understood the clause in the agreement regarding the running of O.P.(C) No.1951/2011 12 limitation for recovery of the amount, the court below is not expected to proceed on the basis of preliminary issue to decide the question of limitation and that procedure adopted by the court below in this case is unsustainable in law and is illegal and the same is liable to be set aside on that ground also. In the result, the order passed by the court below on the question of limitation is set aside and the matter is remitted to the court below with direction to the court below to give opportunity to the parties to adduce evidence on the whole issues and thereafter decide the question afresh on the basis of the evidence untramelled by the observations made regarding the question of limitation decided in the impugned order. Considering the fact that the case is of the year 2009, court below is directed to expedite disposal of the case as expeditiously as possible, at any rate, within four months from the date receipt of this judgment or from the date on which the parties are directed O.P.(C) No.1951/2011 13 to appear before the court, whichever is earlier. Both the counsel submitted that if a date is fixed for appearance, they will appear before the court below so that the delay in disposal can be avoided. So parties are directed to appear before the court below on 28.10.2016. Registry is directed to communicate this judgment to th court below at the earliest. K.RAMAKRISHNAN , JUDGE vdv/04/10/16